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Graphing Demand Curves for Medicaid Prescriptions

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In some state Medicaid programs, the coinsurance rate for prescription drugs is 0 (recipients have no out-of-pocket expenses for prescription drugs). Assume the inverse demand for the number of prescriptions filled per month without insurance is P=45-5Q. Graph the demand curve with and without insurance.

Over the past 15 years, many state Medicaid programs have adopted some form of cost sharing for prescription drugs. Suppose a state adopts a copayment rate of $9 per prescription. Graph the demand curve in this case. Suppose the average prescription is $15.

What is demand under i) no insurance, ii) 0% coinsurance, and iii) $9 copayment?

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Solution Summary

Given the Demand function for prescription drugs, this solution shows how to graph the demand curves under 3 conditions:
i) no insurance
ii) 0% coinsurance
iii) $9 copayment

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Problem: In some state Medicaid programs, the coinsurance rate for prescription drugs is 0 (recipients have no out-of-pocket expenses for prescription drugs). Assume the inverse demand for the number of prescriptions filled per month without insurance is P=45-5Q. Graph the demand curve ...

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